entrepreneurship – AVChttp://avc.com
Musings of a VC in NYCThu, 17 Aug 2017 11:42:40 +0000en-UShourly1https://wordpress.org/?v=4.8.1Founder Friendlyhttp://avc.com/2017/08/founder-friendly/
http://avc.com/2017/08/founder-friendly/#respondSun, 13 Aug 2017 10:31:20 +0000https://avc.com/?p=16548Long time VC watcher, writer, and analyst Dan Primack suggested on Friday that the days of VCs trying to out “founder friendly” each other are now over.

It is an interesting observation and was worthy of a reply. The VC industry is highly competitive for the best opportunities and we certainly do try to ingratiate ourselves and our firms to the entrepreneurs who will decide who gets to invest in their companies and who does not. Being “founder friendly” is an important way to do that.

But there is another important participant in the VC/entrepreneur relationship and that is the Company the entrepreneur creates and all of its stakeholders; the employees, the customers, the suppliers, and even the community around the Company.

Having worked with entrepreneurs for over thirty years now, I have developed tremendous admiration for what they do and for the Companies they create. Entrepreneurs are a very special breed of people.

But there are times when interests diverge and what is best for the Company and it’s stakeholders may not be what an entrepreneur perceives to be in their own best interest. This creates a conflict situation and VCs are often caught in the middle of it.

I’ve been there many times and my mantra in those moments is “what is best for the Company?”. It has to be that way and, many times, when it is all over and done, the founder realized it was in fact best for them too.

Of course, reasonable people will disagree about what is best for a Company. That is what Boards are for. They are the bodies made up of reasonable people who can and should debate these issues and find resolution and make the hard decisions.

I reject the notion that being led by its founder is always what is best for a Company. It is often so, but certainly not always so.

Orthodoxy in thinking and believing is quite troublesome. There is no one way to do things and no single truth. You have to figure things out all the time based on facts and circumstances, based on a combination of experience and knowledge. If you do that well, you will get a lot right but never everything right.

I have heard from quite a few founders that they read the book Hatching Twitter and came away thinking that they would not want to work with me. That sucks for me but I don’t regret anything I did or said in the events that were described in that book.

You must try to make the right decisions for what is best for the Company and if that means being labeled unfriendly to founders, so be it.

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]]>http://avc.com/2017/08/founder-friendly/feed/0Greed Isn’t Goodhttp://avc.com/2017/08/greed-isnt-good/
http://avc.com/2017/08/greed-isnt-good/#respondMon, 07 Aug 2017 12:24:13 +0000http://avc.com/?p=16528The famous Gordon Gekko line that “greed is good” is bandied about quite often to explain why capitalism, and the pursuit of riches, is a positive thing for the economy, society, and the world at large.

Greed is not good. There is a fine line between the profit motive and greed.

I am a firm believer in the profit motive. It drives many of us to work hard, make new things that can move the world forward, and better our lives and the lives of our children, and others, through philanthropy.

But when the profit motive is taken to excess and you enter into the territory of greed, things go bad quickly.

We have seen this in the tech sector in many places, we have seen it in wall street, in real estate, and elsewhere. And we certainly are seeing it crop up in the crypto sector as well, particularly recently.

I like the concept of checks and balances. It is important to make sure to stay on the right side of the line between what is reasonable and what is excessive. Surrounding yourself with the right people, who have been around this issue a lot, can help a lot.

There are a lot of temptations out there when a lot of money is sloshing around. It is good to resist them.

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]]>http://avc.com/2017/08/greed-isnt-good/feed/0Podcast Weekend: Gotham Gal On The Role Models Podcasthttp://avc.com/2017/08/podcast-weekend-gotham-gal-on-role-models/
http://avc.com/2017/08/podcast-weekend-gotham-gal-on-role-models/#respondSun, 06 Aug 2017 10:14:05 +0000http://avc.com/?p=16525My friend David reached out to me and suggested that I share this podcast with the AVC crowd.

In it, he and the Gotham Gal talk about her career and the lessons she learned from it over the years.

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]]>http://avc.com/2017/08/podcast-weekend-gotham-gal-on-role-models/feed/0A Range Not A Pricehttp://avc.com/2017/08/a-range-not-a-price/
http://avc.com/2017/08/a-range-not-a-price/#respondThu, 03 Aug 2017 09:35:47 +0000http://avc.com/?p=16517Entrepreneurs often struggle with how to signal their valuation expectations to investors.

Investors rightly want to know what the entrepreneur’s price expectations are before investing significant time on the opportunity.

But entrepreneurs don’t want to negotiate against themselves and certainly don’t want to undervalue themselves.

So what I always recommend to the entrepreneurs we work with and, frankly, anyone who asks is to “give a range, not a price.”

Let’s say you are raising a Series A round and have an aspirational valuation in mind of $30mm pre-money, raising $6mm.

But you know that is an aggressive valuation and you may have to accept something materially less in order to get a deal done.

Then I would tell investors “we want to raise $4mm to $6mm and don’t want to dilute more than 20% including any increases to the pool.”

An investor could read that as you would accept $4mm at $16mm pre-money but you have signaled that $30mm post-money is where you are aiming.

And, because you said “don’t want to dilute more than 20%”, you have left some room for your aspirational valuation of $30mm pre-money in which $6mm would dilute the company roughly 17%.

Try this the next time you are asked for a valuation from an investor. It works well.

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]]>http://avc.com/2017/07/unrelenting-stress/feed/0Video Of The Week: Shipping As A Competitive Advantagehttp://avc.com/2017/07/video-of-the-week-shipping-as-a-competitive-advantage/
http://avc.com/2017/07/video-of-the-week-shipping-as-a-competitive-advantage/#respondSat, 29 Jul 2017 10:37:15 +0000http://avc.com/?p=16507Our portfolio company Shippo is helping ecommerce companies compete with Amazon by making shipping easier and less expensive to offer.

In this short(ish) video, Shippo’s founder and CEO, Laura Behrens Wu explains how they do that and why it is so important.

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]]>http://avc.com/2017/07/video-of-the-week-shipping-as-a-competitive-advantage/feed/0Startup Churnhttp://avc.com/2017/07/startup-churn/
http://avc.com/2017/07/startup-churn/#respondThu, 27 Jul 2017 08:25:38 +0000http://avc.com/?p=16502We encourage all of our portfolio companies to measure their churn rates by cohort. It is very revealing.

I saw this tweet by Liad this morning that shows startup churn by cohort.

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]]>http://avc.com/2017/07/startup-churn/feed/0Zemanta – From SeedCamp to Outbrainhttp://avc.com/2017/07/zemanta-from-seedcamp-to-outbrain/
http://avc.com/2017/07/zemanta-from-seedcamp-to-outbrain/#respondTue, 25 Jul 2017 16:00:42 +0000http://avc.com/?p=16490In the summer of 2008, I attended the SeedCamp in London and the winner of that class was a company called Zemanta, out of Ljubljana Slovenia. I was taken with everything about Zemanta; a small team (three founders), out of a place that I had never been to and had barely heard of, winning the SeedCamp with a really smart blogging tool that I just had to have on my blog.

USV invested in a seed round that summer that was led by the SeedCamp folks and Eden Ventures. Zemanta was USV’s first European investment. Today, we have ten out of sixty-seven active portfolio companies (~15%) based in Europe.

The seed investment in Zemanta led to a nine year journey with Bostjan and Andraz, who founded Zemanta along with Ales.

The blogging tool is amazing. It recommends links and images in real time as you type into your blogging tool. I still have it running in my WordPress web application. It looks like this right now.

Zemanta sold the blogging tool to a company called Sovrn a while ago and refocused on the native advertising market. They understood how to place related content into a content feed as well as anyone and they decided to focus the company on that. Bostjan and Andraz recruited Todd to lead the new business opportunity. Over the course of the last three years, Zemanta DSP has become the leading buying tool for native advertising.

And the largest company in the native advertising market, Outbrain, became their largest customer. So a few months ago, Outbrain asked the Zemanta founders to join their team and help build some important new technology for Outbrain. After haggling for a few minutes, the deal was sealed and Outbrain now has an office and a team in Ljubljana.

Like every investment, Zemanta taught me a few important things. I learned how to work with founders from a different part of the world, I learned that Ljubljana is a lovely little city with wonderful cafes and restaurants along a gorgeous river, I learned that you can keep a company alive for almost a decade on less than five million dollars if you have a crack team of product managers, data scientists, and software engineers in a place that most people don’t know about, and I learned that tenacity wins, always.

I am pleased that Zemanta has found a home inside a larger company with a bigger opportunity, I am pleased that Ljubljana has a startup success it can point to, and I am pleased that USV is now a shareholder in Outbrain, an investment I mistakenly passed on a decade ago. But mostly I am pleased that Bostjan and Andraz, with a lot of help from Todd, were able to go all the way, from startup to exit, never losing that which makes them special. That’s a big win in my book.

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]]>http://avc.com/2017/07/zemanta-from-seedcamp-to-outbrain/feed/0Working Across Many Time Zoneshttp://avc.com/2017/07/working-across-many-time-zones/
Wed, 05 Jul 2017 11:38:32 +0000http://avc.com/?p=16432I was in Europe for most of June and working on a lot of things with people in the bay area. The nine hours of time zone difference was challenging. I was doing a lot of calls in the evenings with people who were just waking up.

There were many times when I woke up in Europe to a brief window where I could talk to people in the bay area who were still working and had not wrapped things up for the day before.

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]]>Video Of The Week: Purpose, Mission, Strategyhttp://avc.com/2017/07/video-of-the-week-purpose-mission-strategy/
Sat, 01 Jul 2017 10:25:34 +0000http://avc.com/?p=16423Last month my colleague Nick Grossman gave a really great talk at The Next Web in Amsterdam. In it, he talks about the importance of purpose, mission, and strategy and how to connect them in your company. And he shares a lot of great examples from our portfolio in his talk.